Tuesday, July 11, 2017

Laurence M. Vance: Liquor socialism

As long as America has been a nation, governments at all levels have sought to tax, regulate, control, and even prohibit the manufacture, sale, and consumption of alcoholic beverages.

The most infamous example, of course, is the era of Prohibition.
The Eighteenth Amendment to the Constitution took effect in January 1920. It didn’t ban outright the consumption or possession of alcohol, just its “manufacture, sale, or transportation.” The National Prohibition Act (the Volstead Act), the “appropriate legislation” that formally instituted Prohibition, effectively criminalized the possession of alcoholic beverages, because “the possession of liquors by any person not legally permitted under this title to possess liquor shall be prima facie evidence that such liquor is kept for the purpose of being sold, bartered, exchanged, given away, furnished, or otherwise disposed of in violation of the provisions of this title.”

Although the Eighteenth Amendment was repealed by the Twenty-first Amendment in 1933, the unauthorized production of distilled spirits by individuals is still a crime, the amount of beer and wine that one can produce at home is limited, Sunday sales of alcoholic beverages are heavily regulated, and there are hundreds of “dry” counties across the United States that prohibit the sale of alcoholic beverages.

One result of government intervention in the alcoholic-beverage market is the liquor store.

In Louisiana, the sale of alcoholic beverages of any kind is permitted in supermarkets, drug stores, gas stations, and convenience stores. But in most other states, distilled spirits can be purchased only at a liquor store.

In my state of Florida, Gov. Rick Scott recently vetoed a bill (SB 106) that would have allowed grocery stores, gas stations, and other retailers to sell liquor alongside the beer and wine they already sell. Currently, spirits must be sold in a stand-alone location or in an attached location that has its own entrance.

Independent liquor-store owners, the state’s oldest and largest fine wine and spirits merchant (ABC Fine Wine & Spirits), and a major grocery chain (Publix Super Markets) that operates many liquor stores all opposed the legislation. The Florida Independent Spirits Association, an organization representing the privately owned, spirits-only retailers across the state, delivered more than 3,000 petitions to Governor Scott urging him to veto the bill. In a surprise move, Scott wrote in his veto message that although he has been committed from the day he took office “to eliminating regulations that impose duplicative and unnecessary requirements on Florida’s citizens and businesses” and has “repealed almost 5,000 regulations to reduce unnecessary burdens on Floridians,” he was vetoing the bill because of “concerns as to how this bill could affect many small businesses across Florida.”

By Scott’s reasoning, the best way for the state of Florida to help small businesses would be to mandate that each and every product currently sold in grocery and department stores must be sold in a separate store.

The truth, of course, is that the passage of the bill would positively affect Florida small businesses because it would allow them to begin selling a product that they have heretofore been prohibited from selling. It is just one type of small business (independent liquor stores) and large retailers that can afford to house separate liquor stores within their footprint that benefit from this bill being squelched. Scott’s veto is likewise anti-consumer, since it gives consumers fewer choices on store shelves and forces them to go to specific stores to purchase a certain commodity. Scott’s veto is all about maintaining a government-granted privilege that benefits some businesses at the expense of others.

To see how ridiculous this protectionist scheme is, just imagine that the state of Florida had mandated that meat must be sold only in meat stores, fruit must be sold only in fruit stores, and vegetables must be sold only in vegetable stores. Yes, there are butcher shops, fruit stands, and vegetable markets in Florida, but that doesn’t mean that meat, fruits, and vegetables aren’t also available in grocery stores. Even if Scott had signed SB 106 into law, that doesn’t mean that there would be no more liquor stores in Florida.

Things are even worse in other states.

Seventeen states are “Alcoholic Beverage Control” states where the state has control over the wholesaling or retailing of some or all types of alcoholic beverages, especially distilled spirits.

This is liquor socialism.

Although the governments in states with state-owned liquor stores don’t own the means of production — that is, the state governments don’t actually produce the alcohol that is sold — they effectively do, since it is the government that owns the liquor stores, decides where the liquor stores will be located, determines which brands and sizes will be offered for sale, sets the prices of the products, establishes what the operating hours of the store will be, and chooses who will be hired as employees. And of course, in conjunction with all of that, all other entities are prohibited from doing the same things. The government has an absolute monopoly on liquor sales. That is about as close to liquor socialism as one can get short of the government’s actually distilling the spirits.

Imagine if the governments of each of the fifty states decided that they would have a monopoly on every good that was offered for sale: food, automobiles, paper products, computers, cosmetics, lumber, nails, coal, gasoline, natural gas, tires, plastics, appliances, clothing, shoes, hats, paint, office supplies, and so on. Imagine if those governments required a separate store dedicated to each good. Imagine if all manufacturers could sell their products only to the government, and not directly to stores or consumers.

Sounds absolutely ludicrous. And indeed it is. So why isn’t a government monopoly on distilled spirits deemed to be just as ludicrous? And why stop there? All government efforts to tax, regulate, control, and prohibit the manufacture, sale, and consumption of alcoholic beverages should be viewed the same way.

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